Some cashed-in 'clunkers' may see second lives

The federal government has put strict rules in place to ensure vehicles turned in under its popular "cash for clunkers" program aren't simply resold to new owners. After all, much of the program's intent is to get older gas-guzzlers off the nation's roads by offering current owners incentives of up to $4,500 to buy more fuel-efficient cars and trucks.

But there are skeptics who think it is likely that some of those cars will make it back into circulation despite stringent rules that levy fines of up to $15,000 against dealers. "In some instances, there's not all that much they can do," said Jack R. Nerad, executive market analyst for Kelley Blue Book, a publisher of new- and used-car information.

Some turned-in vehicles may be "cloned," Nerad said, a process in which vehicle identification numbers are removed from legal cars and put on clunkers, giving them a new identity.
"We're doing everything possible to ensure that doesn't happen," said Karen Aldana, spokeswoman for the National Highway Traffic and Safety Administration, which administers the program, known officially as Car Allowance Rebate System, or CARS.

The government believes the regulations it has put in place, outlined in a 136-page rule book, give dealers or others little incentive to thwart requirements that turned-in vehicles be scrapped.

Under the rules, owners of eligible vehicles, which must be less than 25 years old and generally get less than 18 MPG, receive a credit from a dealer to trade-in their vehicles for a new car. Dealers must then transfer the cars to disposal facilities that will crush or shred them so that they aren't returned to the road. Parts can be salvaged, to the exclusion of the engine block.

The government can withhold reimbursement if it believes a vehicle has not been disposed of properly. It is for that reason and others the government says it believes dealers have every reason to avoid entering into a transaction for which the dealer cannot be reimbursed under this program.

The NHTSA "will vigorously pursue actions against anyone it believes has submitted false information in connection with this program," it said in its rule-making.

The regulations also layout clear guidelines regarding scrapping, noting that turned-in vehicles must be released only to approved facilities that agree not to "sell, lease, exchange, or otherwise dispose of the vehicle for use as an automobile in the United States or any other country."

But scrapping turned-in vehicles has raised concern about reducing the pool of affordable vehicles. While it would seem there is little market for older, inefficient cars and trucks, Nerad said the kinds of cars being turned in under the program (and thus destined to be scrapped) are the very cars that those on the lowest rung of the economy are able to afford.

"The people hardest hit are low-income people," he said.

Further, Nerad said, the program is reducing the number of cars that otherwise would be donated to charities, which in turn give the vehicles to those in need or sell them at auction to raise funds for programs and general operating expenses.